E7-1955. Tesco Technologies, LLC, Headquarters Office, Auburn Hills, MI; Notice of Revised Determination on Second Remand

On November 9, 2006, the United States Court of International Trade (USCIT) remanded Former Employees of Tesco Technologies, LLC v. United States (Court No. 05-00264) to the Department of Labor (Department) for further investigation.

In the August 19, 2004, Trade Adjustment Assistance (TAA) and Alternative Trade Adjustment Assistance (ATAA) petition, three workers identified Tesco Engineering as the subject company and the article produced as “designs for tooling and production lines for General Motors automotive assembly plants.” The petitioners alleged that Tesco Engineering was shifting production to a foreign country.

During the investigation, it was revealed that Tesco Engineering manufactured equipment, while workers at Tesco Technologies, LLC (“Tesco Technologies”), a subsidiary of Tesco Engineering, created mechanical designs used to build equipment for automotive part production. Since the petitioners created designs and did not produce equipment, the Department identified Tesco Technologies as the proper subject company.

Because the Department considered design creation not to be production, the Department concluded that the designers of Tesco Technologies could be certified only if they supported an affiliated, TAA-certifiable, domestic, production facility. Although Tesco Technologies' designs accounted for an insignificant portion of the equipment produced at Tesco Engineering, the Department nonetheless fully investigated whether, during the relevant period, there were increased imports of production/assembly equipment or a shift of production from Tesco Engineering to an overseas facility.

The expanded investigation revealed that Tesco Engineering neither shifted production to a foreign country nor imported any equipment during the relevant period. Further, a survey of Tesco Engineering's major declining customers revealed that, during the relevant period, no customer increased its import purchases while decreasing its purchases from the subject firm.

On September 27, 2004, the Department issued a denial regarding workers' eligibility to apply for TAA and ATAA for workers of Tesco Technologies, LLC, Headquarters Office, Auburn Hills, Michigan. The determination was based on the findings that there was neither an increase in imports of equipment by Tesco Engineering or its major declining customers, nor a shift of production overseas by Tesco Engineering. The Department published the Notice of determination in the Federal Register on October 26, 2004 (69 FR 62460).

By application dated October 22, 2004, the petitioner requested administrative reconsideration of the Department's determination. On December 7, 2004, the Department issued a Notice of Affirmative Determination Regarding Application for Reconsideration due to factual discrepancies identified during the review of the request and of previously-submitted documents. The Department's Notice was published in the Federal Register on December 20, 2004 (69 FR 76017).

In the request for reconsideration, the petitioner identified the subject company as “Tesco Technologies, LLC, Auburn Hills, Michigan” and asserted that “we the petitioners are connected to General Motors tooling only,” reiterated that designs are a product, and inferred that designers are de facto production workers producing automobile parts for General Motors. The petitioner also implied that the subject company's major customer, General Motors, had outsourced work to India.

During the reconsideration investigation, the Department contacted a Tesco Technologies official, the General Motors officials identified by the petitioner, and the General Motors official who supervised the design contract at issue.

During the reconsideration investigation, the Department confirmed that the petitioners used application software to develop tooling designs which were used to build equipment for the production of automobile parts for General Motors; the designs are developed at Tesco Technologies, Auburn Hills, Michigan and sent to the customer via electronic means (such as the Internet) and tangible means (such as CD-ROM); and General Motors did not outsource work overseas but awarded the work to another domestic company and moved some design work in-house.

On January 11, 2005, the Department issued a Notice of Negative Determination Regarding Application for Reconsideration which stated there was neither a shift of production abroad by Tesco Technologies nor any outsourcing of design work overseas by General Motors. The Department's Notice was published in the Federal Register on January 21, 2005 (70 FR 3228).

By letter dated February 8, 2005, the petitioners appealed to the USCIT for judicial review. On May 25, 2005, the USCIT granted the Department's motion for voluntary remand to clarify the Department's basis for the negative determination on reconsideration and to request additional information in the Department's efforts to clarify the reasons for the previous determinations.

In the request for judicial review, the petitioners alleged that engineers were brought in from India to train at Tesco Technologies; later, the engineers were sent back to India to a General Motors facility; and “work is sent over to India via satellite in the evening and sent back for check and inspection in the morning” (implying that designs were being imported).

In order for the Plaintiffs to be certified for TAA based on a shift of production, it must be shown that there was:

(1) A significant portion or number of workers at the subject company separated or threatened with separation during the relevant period; and

(2) either—(a) A shift in production of articles like or directly competitive with those produced by the subject worker group to a country that is party to a free trade agreement with the United States, or a country that is named as a beneficiary under the Andean Trade Preference Act, the African Growth and Opportunity Act or the Caribbean Basin Economic Recovery Act, or (b) a shift of production abroad followed by actual or increased imports of articles like or directly competitive with those produced by the subject worker group.

Because it was shown that at least five percent of workers at Tesco Technologies were separated during the relevant period, the worker separation criterion was met.

Because India is not a country that is party to a free trade agreement with the United States, or a country that is named as a beneficiary under the Andean Trade Preference Act, the African Growth and Opportunity Act or the Caribbean Basin Economic Recovery Act, the only issue in the first remand investigation was whether, during the relevant period, there was a shift of production abroad of articles like or directly competitive with those produced by Tesco Technologies followed by actual or threatened increased imports of articles like or directly competitive with those created at Tesco Technologies.

Under the Department's interpretation of “like or directly competitive,” (29 CFR 90.2) “like” articles are those articles which are substantially identical in inherent or intrinsic characteristics and “directly competitive” articles are those articles which are substantially equivalent for commercial purposes (essentially interchangeable and adapted to the same uses), even though the articles may not be substantially identical in their inherent or intrinsic characteristics.

During the first remand investigation, the Department determined that because each design created by the workers is “unique,” there could not be any articles which are like or directly competitive with any design produced by Tesco Technologies and, consequently, the shift of production criterion could not be met.

The Notice of Negative Determination on Remand applicable to the subject workers was issued on July 25, 2005 and the Notice of determination was published in the Federal Register on August 5, 2005 (70 FR 45438).

In its November 9, 2006 opinion, the USCIT remanded the case at hand to the Department for further investigation.

Since the Notice of Negative Determination on Remand applicable to the subject firm was issued, the Department has clarified its policy to acknowledge that, under certain circumstances, there may be articles which are like or directly competitive to a “unique” article.

Reviewing the relevant facts with the foregoing in mind, the Department has determined that, during the relevant period, a significant portion of workers was separated from the subject facility, design production shifted abroad, and the subject firm increased its imports of designs following the shift.

In accordance with Section 246 the Trade Act of 1974 (26 U.S.C. 2813), as amended, the Department herein presents the results of its investigation regarding certification of eligibility to apply for ATAA for older workers. In order for the Department to issue a certification of eligibility to apply for ATAA, the group eligibility requirements of Section 246 of the Trade Act must be met. The Department has determined in the case at hand that the requirements of Section 246 have been met.

A significant number of workers at the firm are age 50 or over and possess skills that are not easily transferable. Competitive conditions within the industry are adverse.

Conclusion

After careful review of the facts generated through the second remand investigation, I determine that a shift in production abroad of articles like or directly competitive to that produced at the subject facilities followed by increased imports of such articles contributed to the total or partial separation of a significant number or proportion of workers at the subject facility. In accordance with the provisions of the Act, I make the following certification:

All workers of Tesco Technologies, LLC, Headquarters Office, Auburn Hills, Michigan, who became totally or partially separated from employment on or after August 19, 2003, through two years from the issuance of this revised determination, are eligible to apply for Trade Adjustment Assistance under Section 223 of the Trade Act of 1974, and are eligible to apply for Alternative Trade Adjustment Assistance under Section 246 of the Trade Act of 1974, as amended.

Signed at Washington, DC this 26th day of January 2007.

Elliott S. Kushner,

Certifying Officer, Division of Trade Adjustment Assistance.